Wintel Rides Again, Now to IoT

SAN JOSE, Calif. — Microsoft is expected to announce a partnership in April to dive into the Internet of Things with its veteran PC partner, Intel. The two are expected to deliver an IoT offering that supports Intel's Quark, a Pentium-class processor for the IoT.

It's not clear whether the work will focus on embedded versions of Windows, Windows Phone, or another code base. Whether the work includes hosted IoT services using Microsoft's Windows Azure cloud service also is unclear.

Neither Microsoft nor Intel responded to requests for interviews on the topic today. The plan is expected to be announced at Microsoft Build in San Francisco.

The Wintel duopoly has ruled the PC market from its early high-growth days until the present. Now that PC growth has leveled off, it makes sense for the two to collaborate on emerging markets in the IoT.

"Much of their deployed base in the embedded market remains interwoven," Christopher Rommel, an analyst covering the IoT at VDC Research, told us. "It only makes sense that they would look to cater to the desires and needs of their existing customer base with a joint roadmap and solution for small-footprint devices." He has not been briefed on any specific product plans from the two companies.

For Intel, an IoT partnership with Microsoft "would be a further demonstration of their commitment to support a range of operating systems for small-footprint devices – beyond Wind River and Android," he said. "For Microsoft, it would serve as a an opportunity to push down to device classes historically served by more traditional real-time operating systems that CE/Compact couldn't even address previously."

Microsoft is likely to tap other microprocessor partners for the IoT. Its Windows RT and Compact 7 already support ARM, opening the door to a smorgasbord of integrated, low-power processors well suited for IoT apps.

The company has something of a checkered history in embedded operating systems. It has rolled out several versions of platforms based on subsets of its Windows code, but it has often taken heat for not providing adequate support, especially for real-time features. Nevertheless, it has a significant installed base in embedded systems, a wide community of Windows developers, and an opportunity to tie together its device software with Azure cloud services.

Competitors are eyeing similar opportunities. Apple CEO Tim Cook has talked in vague terms about changing the "user experience" of living in ways that suggest it could be working on a consumer IoT cloud service. IBM already has an IoT cloud service for businesses, and Cisco Systems is expected to launch one soon.

"I don't know how people will react to a version of Windows for IoT," Chad Jones, vice president of product strategy for Xively, which provides cloud IoT services based on the platform of its parent company, LogMeIn, told us. "In the end, more companies jumping into this market will increase the pie."

>> If ARM started making their own SoCs, it would compete directly with all its customers

Good luck to them. I know Google makes tablets and phones even though they own Android. That is not an excuse. We are looking for ways to jack up earnings and return money to shareholders. They can enjoy the cents they get per phone. Good luck to them.

>> Total valuation is not a useful measure for anything. What matters is growth potential into the future.

No problem. I look forward to the future but I want relevance today. I agree with you and I am not defending Intel for anything. I am saying that today, it is has a higher valuation than ARM and when you go through its history, it was more profitably at the age ARM is today.

> My point is now largely on the comparison of ARM and Qualcomm valuation. > I am talking about why ARM may consider to get into making things. I know they > have more valuable IPs than their current valuation because of their business model

If ARM started making their own SoCs, it would compete directly with all its customers. ARM has no modem IP and no experience selling chips. ARM's business model works so well because they are not really competing with anybody (apart maybe Imagination Technologies).

Total valuation is not a useful measure for anything. What matters is growth potential into the future. And the facts point to ARM having a much higher chance to give good returns over the next 10 years than Intel. What Intel did 30 years ago is not relevant today.

What matters today is that Intel's profits are declining, fab costs are increasing fast, TSMC is catching up, Intel missed all opportunities in mobile phones (a miserly 0.2% marketshare after spending many billions over 6 years) and now appears to push a summer student project (Quark) as their IoT chip...

Good point @wilco1...I was always impressed with ARM and wanted to buy their stock seeing their bright futures...but silly me, I always thought the stock was too expensive...so in my mind ARM valuation was too high ;-)

>> ARM is already making a lot of money for investors. For example if you invested 10 years ago, you would be sitting on a nice profit of 666%. Compare that to Intel's return of -7%.

That is bad analysis. At the same age, within a decade, Intel returned 5678%. You need to benchmark your time. Also, it does not matter the time of investment, we are looking at total valuation. Look into the future and not the past.

My point is now largely on the comparison of ARM and Qualcomm valuation. I am talking about why ARM may consider to get into making things. I know they have more valuable IPs than their current valuation because of their business model

Selling black gold may still be profitable, but you'd be crazy to invest into dinosaurs today. It's becoming very expensive to get that last carbon out of the ground. Regulations are getting stricter. Subsidies turn into taxes. If you don't feel the wind of change blowing then you'll miss the next big thing.